What does Claiming a Travel Nurse Tax Home Mean?
There are two ways travel nurses can be paid as a travel nurse. This also applies to other traveling healthcare workers. Travel nurses are paid a ‘blended rate’ of tax-free stipends and taxable hourly wage; or, are paid a fully taxable hourly wage taxed on the total rate of pay.
Travel nurses can only receive the tax-free stipend option if they can claim a ‘permanent tax-home’. A tax home for travel nurses means they must be able to prove that they contribute a ‘reasonable monetary amount’ (determined by the IRS) to a home that they own or rent in a location at least 50 miles from their travel assignment. If a travel nurse claims a rented room or apartment as a tax home, then the monthly amount paid must be comparable to similar market prices in the area.
A travel nurse tax home, or permanent tax home will be where the nurse claims permanent residency and contributes to a cost of living. This means that the travel nursing tax home will most likely be where the nurse holds a driver’s license, registers their car, maintains a home, and earns a majority of their income.
The IRS requirements to maintain a tax home and save on tax deductible expenses are:
- You perform part of your business in the area of your main home and use that home for lodging while doing business in the area.
- You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
- You haven’t abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging
Travel Nursing Tax Home With Parents or Friends
If a travel nurse wants to claim a room at their parent’s house or at a friend’s, the same rule as above applies. The nurse must pay a ‘fair market value’ for that room and the person that the nurse is paying to live there must claim that rent as income on their taxes.
Can a Travel Nurse Rent their Home while they Travel?
If a nurse owns a home and rents it out while they are gone, they must claim that as income on their taxes. If they claim that home as a travel nursing tax home, they must prove they are duplicating expenses if they are audited.
When do Travel Nurses have to Declare a Tax Home?
Traveling nurses will be required to complete and sign a declaration of their permanent tax home with their travel nursing agency if they choose to take the tax-free stipends in their pay. It is wise to ask in advance what is needed as proof of a tax home so any paperwork can be prepared in advance. Many agencies have the nurse sign the travel nurse tax home declaration when they sign their contract.
Travel Nursing Without a Tax Home
If a nurse cannot prove that they duplicate expenses and maintain the cost of living in two areas, they are required to be taxed on the total hourly wage. This would qualify as a ‘local contract’. It is important that nurses let their recruiters know ASAP if they will not be claiming a travel nurse tax home. It changes some of the stipulations of the contract and the recruiter will need to quote a new pay package.
Local agency travel nursing contracts still pay significantly higher than staff nursing, but may have a lower take travel nursing pay than a travel nursing contract that pays tax-free stipends. This may seem like a disappointment but isn’t necessarily a bad thing.
Cons to Claiming a Tax Home for Travel Nurses
Taking the tax-free pay means that the yearly income on a W-2 will appear much lower than what the travel nurse actually received in pay. This means if they want to apply for any sort of credit or loan, they may not be approved because their income appears to be less.
Claiming a tax home is an individual decision for each travel nurse. If they are planning to buy a car or home, or applying for any major loan in the next few years, it may be best to just work as a ‘local’ traveler and pay the taxes.